National Consumer Disputes Redressal
Captain C.P. Gupta vs Indian Airlines Provident Fund Trust on 3 December, 2002
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 456 OF 1998 (From the order dated 2.3.1998 in Appeal No.A/395/94 of the State Commission, Delhi) Captain C.P. Gupta Petitioner Vs. Indian airlines Provident Fund Trust, through its Principal Officer & Ors. Respondents BEFORE: HONBLE MR. JUSTICE D.P. WADHWA, PRESIDENT HONBLE MR. JUSTICE J.K. MEHRA, MEMBER MR. B.K. TAIMNI, MEMBER. Employees Provident Fund - Employee of Indian Airlines, a Government Corporation - Section 16(1) ( c ) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 inapplicable. Indian airlines Employees Provident Fund Regulations, 1955 applicable - employee is a consumer and violation of regulations to the detriment of employee raises consumer dispute. O R D E R
DATED THE 3rd DECEMBER, 2002.
JUSTICE D.P. WADHWA, J.(PRESIDENT) It is Captain C.P. Gupta, complainant, who is petitioner before us. He joined Indian Airlines, the respondents-opposite parties, in 1976 and was governed by the Indian Airlines (Flying Crew) Service Regulations and for the provident fund by the Indian Airlines Employees Provident Fund Regulations 1955. Captain Gupta suffered some heart ailment and underwent by-pass surgery. He was declared unfit for flying duties. He was put on annuity @ 95% of his last salary plus Rs.100/- per month w.e.f. 2.4.91 till the date of his superannuation which was July, 1993. He was put on annuity with a condition that as and when he regained his relevant medical category he shall resume his flying duties. Captain Gupta had become member of the Provident Fund Scheme of the Indian Airlines under the aforesaid Service Regulations and was governed by Provident Fund Regulations. It was part of the conditions of his service.
Captain Gupta was given a cheque dated 14.6.91 for Rs 7,64,800.80 towards full and final settlement of his provident fund account. Grievance of Captain Gupta in his complaint in the District Forum was that under the relevant Provident Fund Regulations he could have kept his provident fund dues in that account for a period of 365 days from the date of his retirement. He said interest earned on provident fund deposits was free from income-tax and by the action of the Indian Airlines in sending him the cheque before the expiry of 365 days from the date of his retirement had made him not only to lose the interest as per provident fund rate but also made him to pay income tax on the interest earned during the period from 16.6.91 to July, 1994 one year after the date of retirement. He also complained that the amount was paid to him in the middle of the month and again there was a loss of interest. He calculated the loss suffered at Rs.39,449/-. A sum of Rs.414/- has also been claimed as interest on the amount of Rs.2,400/- as according to complainant this amount of Rs.2400/- has wrongly been deducted from the annuity paid to him. A sum of Rs.2500/- was claimed as compensation on account of harassment, mental tension and agony as Indian Airlines, his employer, was alleged to be deficient in rendering service to him.
District Forum relying on a circular dated 2.11.88 allowed the complaint. Against this order Indian Airlines filed appeal before the State Commission which said it was the circular dated 16.4.90 which had modified the earlier circular dated 2.11.88 was applicable and also relying on relevant provisions of Provident Fund Regulations, was of the view that complaint had no merit. It, therefore, allowed the appeal and dismissed the complaint. State Commission gave short shrift to the argument of Captain Gupta that he had not in fact retired in 1991 and he was due to retire only in 1993 and therefore, Indian Airlines was deficient in service in sending him the provident fund amount due to him from his account earlier thus putting him to loss.
State Commission also referred the decision of the National Commission in the case of Regional Provident Fund Commissioner vs. Shiv Kumar Joshi - 1(1996) CPJ 199 which was subsequently upheld by the Supreme Court reported as (2000) 1 SCC 98. State Commission distinguished the decision of the National Commission stating that while all expenses for establishing, servicing and maintaining Employees Provident Fund requires to be borne by the Indian Airlines and that in the Shiv Kumar Joshis case the expenses for maintenance of Fund were met from the employees contribution themselves. It was, therefore held that ratio laid in Shiv Kumar Joshis case would not be applicable and no consumer dispute could be raised by Captain Gupta since he was not a consumer as he did not hire any services for consideration.
Main ground on which Captain Gupta was non-suited was that there was no consideration for the service, if any, rendered to him by the Indian Airlines. A distinction was drawn by the State Commission where the expenses for maintenance and running of the provident fund are met out of the funds and where these are met by the employer.
Judgment in the case of Shiv Kumar Joshi was rendered under the Scheme framed under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short, Provident Funds Act, 1952).
This Provident Funds Act of 1952 is not applicable to the Scheme under which provident fund is managed and maintained by the Indian Airlines.
This is in view of clause ( c ) of sub-section (1) of Section 16 of the Provident Funds Act, 1952 which is as under:
16. Act not to apply to certain establishments.- (1) This Act shall not apply
(a) ..
(b) ..
(c) to any other establishment set up under any Central, Provincial or State Act and whose employees are entitled to the benefits of contributory provident fund or old age pension in accordance with any scheme or rule framed under that Act governing such benefits.
Indian Airlines, a Corporation had been constituted under an Act of Parliament. It had, in the exercise of power conferred upon it by clause (b) of sub section (2) of Section 45 of the Air Corporation Act, 1953, framed regulations with the previous approval of the Central Government and these are Indian Airlines (Flying Crew) Service Regulations and Indian Airlines Employees Provident Fund Regulations, 1955. It is not disputed that both these Service Regulations and Provident Fund Regulations has statutory force. It is also not disputed that Captain Gupta was governed by these two regulations. Chapter XIV of Service Regulations deals with the retirement benefits. There are two regulations (i) 189 and (ii) 189 under this Chapter and these provide for contribution to provident fund and are as under:
189: Every employee who has completed one years continuous service shall, subject to the Regulations to be made hereafter in this behalf, contribute to the Contributory Provident Fund each month a minimum of 8-1/3 per cent and a maximum of 20% of his Basic Pay plus other emoluments which may be specifically classed as pay by the corporation for the purpose of Provident Fund. The Corporations contribution to the Fund shall, however, be limited to 8-1/3 per cent of the contribution.
190. The Corporations contribution to the Fund is payable to the employee after five years of membership of the Fund. Subject to this and other regulations to be made hereafter in this behalf, all the accumulated balance to the credit of an employee on the day he ceases to be an employee of the Corporation, is payable to him or his nominee or nominees or executors.
It would be thus seen that it is statutory requirement of an employee to contribute to the provident fund and for the employer i.e. Indian Airlines to give its contribution.
Provident Fund Regulations provide for constitution of a Trust to manage the provident fund.
In fact fund established under these regulations vests in and administered by a Board of Trustees with constitution as provided under Regulation 3. It is not necessary for us to refer in detail to all the Provident Fund Regulations except Regulations 11, 12 (in relevant part), 16, 24 (in relevant part) and 26 which we quote:
11. Fees and Allowances : (1) All expenses relating to the administration of the Fund including the pay and allowances of the staff appointed for the purpose of administering the Fund shall be borne by the Corporation and shall not be charged to the Fund.
12. Member of Fund : Every employee of the Corporation shall be required to become a member of the Fund from the date of which these Regulations come into force if he has on that date completed one years continuous service either under the Corporation or under an existing air company as defined in the Act. Every employee taking up an employment under the Corporation whether before or after the commencement of these Regulations shall also become a member from the beginning of the month following that in which he completed one years continuous service in the Corporation.
(1) Provided that.
(2) .(3)
16. Interest: The official year of the Fund shall be the financial year and the Board shall on the 31st day of March every year or as soon thereafter as is possible,
(i) determine and notify, with the approval of the Chairman of the Corporation, the rate at which interest shall be allowed during the financial year on all deposits standing to the credit of every member of the Fund.
(ii) Prepare an account of the total interest accrued and received on the investment of the Fund during the year,
(iii) Credit the amount of interest due to every member on the balance standing to his credit in the Fund on the 31st March, of the year last preceding the financial year,
(iv) Credit the interest on the initial deposits brought into the fund by a member from the previous employer from the first of the month following the month in which the amount is credited to his account,
(v) Credit the interest on the amount to the extent of the premium paid out of Provident Fund account and recovered upon receipt of that amount after the payment under the Insurance Policy on maturity and credited to the members account from the first of the month following the month in which the amount is credited; and
(vi) Credit of the interest on the amount received from the Regional Provident Fund Commissioner in repayment of Additional Dearness Allowance under the Additional Emoluments Compulsory Deposit Act, 1974 from the first of the month following the month in which the amount is credited to his account.
Provided that in case of cessation of Membership, interest shall be allowed upto the end of the month preceding the date on which the amount is tendered in final settlement of the account.
Provided further that
(a) interest will normally not be paid for a period exceeding 365 days from the date of cessation of membership;
(b) in exceptional cases where the Trustees are satisfied that the delay in settlement has not occurred due to the negligence or delay on the part of the member or his successor, they may allow interest to be paid for a further period not exceeding 365 days;
(c) if on the date on which such payment is tendered the rate of interest for that financial year has not been notified, interest shall be allowed at the rate fixed for the immediately preceding financial year;
(d) no interest shall be paid in respect of any period after the date on which payment is offered.
24. Procedure for final payment of Provident Fund:
(1) When the amount standing to the credit of a member, or the balance thereof after any deduction under Rule 23, becomes payable, the Board shall close the account of the member and shall give a written notice to the person entitled to receive payment, specifying the amount and tendering payment thereof.
In case the member is dead and there is no nominee in accordance with these regulations and if the amount to the credit of the Fund does not exceed Rs.5000 the Board may pay such amount to the claimant if it is satisfied about the title of the claimant.
(1A) ..
26. Modification of the Regulations: The Corporation may, with the previous approval of the Central Government, add to, amend or vary or rescind any provision of these regulations.
We have referred to Regulation 26 to show that no amount of circulars issued by the Board of Trustees can override provisions of Regulations both Service and Provident Fund. This is so as much arguments before the State Commission have proceeded on the basis as to which of the two circulars dated 2.11.88 and 16.4.90 modifying this would be applicable. Nevertheless relevant portions of these two circulars we quote. Circular dated 2nd November, 1988 wherein it was laid down inter alia that:
(i) the members may be allowed to retain the accumulation for a maximum period of 365 days;
(ii) finance manager will intimate to the retired employee at the earliest about the date on which his final settlement of Provident Fund account can be made; and
(iii) on receipt of the letter from the Finance Manager/Dy. Finance Manager, when a member wishes to collect the amount he shall be paid the same by the Indian Airlines from its own account and the payment so made shall be adjusted from the following months accretions of the fund. In view of this Provident Fund Section has not to keep any money uninvested for want of payments to be made to ex-members. As such the Trust will have the actual money available for investments and no provisions will be made by the Trust for payment of final settlements of the ceased members accounts.
The operative portion of the circular dated 16.4.90 is as under:
It is hereby clarified that the members may be allowed to retain their accumulations with the Fund for a maximum period of 365 days, in such cases only where Indian Airlines is not able to settle their accounts due to some reason or the other. In all other cases the final settlement of account of the retiring employee should be made within 30 days of his retirement, as per instructions issued vide our circular No.Fin/Rules/5/33 dated 29th August, 1972 Since a distinction has been drawn by the State Commission with reference to as to who has to meet the expenses for administering the provident fund we might as well refer the judgment of the Supreme Court in the case of Shiv Kumar Joshi.
In the case of Shiv Kumar Joshi the question was whether the provisions of the Consumer Protection Act, 1986 (for short the Act) could be invoked against the Provident Fund Commissioner by member of the Employees Provident Fund Scheme under the Provident Funds Act, 1952. Supreme Court observed that it had to be ascertained as to whether any such member is a consumer and whether the duties performed by the Provident Fund Commissioner under the relevant Scheme would be a service within the meaning of the Act. Supreme Court examined the definition of consumer as given in the Act and said that it was wide and covers in its ambit not only the goods but also services and this is what it said:
The definition of consumer is wide and covers in its ambit not only the goods but also services, bought or hired, for consideration. Such consideration be paid or promised or partly paid or partly promised under any system of deferred payment and includes any beneficiary of such person other than the person who hires the service for consideration. The Act is aimed to protect the interests of a consumer as understood in commercial sense of the term as purchaser of goods and in larger sense user of services.
The important characteristic of goods and service under the Act is that such goods are supplied at a price to cover the costs which consequently result in profit or income to the seller of goods or provider of service. The definition excludes a person who obtains such goods for re-sale or for any commercial purposes.
However, the services hired for consideration even for commercial purposes have not been excluded. A reference to the definition of service unambiguously indicates that the definition is not restrictive and includes within its ambit such services as well which are specified therein. However, services hired or availed, which are free of charge, or under a contract of personal service, have specifically been excluded.
Referring to its earlier decision in Lucknow Development Authority vs. M.K. Gupta [(1994) 1 SCC 243] the following para was quoted:
The main clause itself is very wide. It applies to any service made available to potential users.
The words any and potential are significant. Both are of wide amplitude. The word any dictionarily means one or some or all. In Blacks Law Dictionary it is explained thus, word any has a diversity of meaning and may be employed to indicate all or every as well as some or one and its meaning in a given statute depends upon the context and the subject matter of the statute. The use of the word any in the context it has been used in clause (o) indicates that it has been used in wider sense extending from one to all. The other word potential is again very wide. In Oxford Dictionary it is defined as capable of coming into being, possibility.
In Blacks Law Dictionary it is defined as existing in possibility but not in act. Naturally and probably expected to come existence at some future time though not existing; for example, the future product of gain or trees already planted, or the successive future instalments or payments on a contract or engagement already made. In other words service which is not only extended to actual users but those who are capable of using it are covered in the definition. The clause is thus very wide and extends to and or all actual or potential users.
The argument raised before the Supreme Court on behalf of the appellant was that no part of administrative charges was payable by the employee and the employee therefore could not be held to be consumer within the meaning of Section 2(1)(d) of the Act. This argument was with reference to paragraph 38 of the Scheme under which employer was liable to pay both his contribution to the provident fund as well as administrative charges and that according to the provisions of the Scheme it was the employer who was responsible to pay administrative charges and not the employee. Supreme Court referred to the definition of consideration as contained in Section 2(d) of the Contract Act and also to various dictionaries and observed that perusal of the Scheme unambiguously showed that it was for consideration and that it was immaterial as to whether administrative charges are deducted actually from the wages of the employee or paid by his employer in respect of a employee-member of the Scheme working for such employer. In coming to this conclusion Supreme Court noted that the contribution of the employee has to be equal to the contribution payable by employer in respect of such employee and that the words in respect of were significant as they indicate the liability of the employer to pay his part of the contribution in consideration of the employee working with him and further that but for the employment of the employee there is no obligation upon the employer to pay his part of the contribution to the Scheme. The administrative charges, as required to be paid under para 30 of the Scheme, are also paid for consideration of the employee being the member of the Scheme.
It is immaterial as to whether such charges are deducted actually from the wages of the employee or paid by the employer in respect of the employee who is member of the Scheme and that employee is working for the employer. Supreme Court added:
The administrative charges are further required to be determined having regard to the basic wages, the dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon for the time being payable to the employee. If the contention of the appellant is accepted that as no part of the administrative charges are deducted from the actual wages of the employee, he cannot be deemed to be hiring the services of the scheme, the consequences of such an interpretation shall frustrate the object of the Act and the scheme as in that event no obligation can be cast upon the employer to pay contributions which are equal to the contribution payable by the employee along with the administrative charges. The scheme has to be given such an interpretation which serves the purpose intended to be achieved by it keeping in view the objects of the Act. The administrative charges are in lieu of the membership of the employee and for the services rendered under the scheme. It cannot be held that even though the employee is the member of the scheme, yet the employer would only be deemed to be a consumer for having made payments of the administrative charges.
Admittedly, no service is rendered to the employer under the scheme which is framed for the benefit of the employee .
Supreme Court also rejected the argument that Regional Provident Fund Commissioner, being Central Government, could not be held to be rendering service within the meaning and Scheme of the Act. Finally the Court said:
A perusal of the scheme clearly and unambiguously indicate that it is a service within the meaning of Section 2(1)(o) and the member a consumer within the meaning of Section 2(1)(d) of the Act. It is, therefore, without any substance to urge that the services under the scheme are rendered free of charge and, therefore, the scheme is not a service under the Act.
We have now to analyse the provisions of the Service Regulations and Provident Fund Regulations keeping in view the principles laid by the Supreme Court in the case of Shiv Kumar Joshi. However for that we might as well refer to the Trust established by the Indian Airlines for the purpose of vesting the provident fund in the Trustees for the benefit of the employees. Reference in this connection may be made to Section 2(38) of the Income Tax Act 1962 which defines recognised provident fund and to various other provisions in that Act which help the employer not to pay income-tax on the contributions made by it to the provident fund. An employee also gets benefits under the provisions of the Income-tax Act.
It is the statutory requirement for employees of the Indian Airlines to contribute to the provident fund as per the rates mentioned in para 189 of Chapter XIV of the Service Regulations and the contribution to the fund by the Indian Airlines, the employer. Under Regulation 190 all the balance lying to the credit of the employee is payable on the day he ceases to be an employee of the Indian Airlines. Regulation 12 of the Provident Fund Regulations also requires that every employees to become the member of the Fund.
Regulation 16 of the Provident Fund deals with the payment of interest on the accumulated balance of provident fund to the credit of the employee. It provides that when a person ceases to be employee of the Indian Airlines interest shall be allowed upto the end of the month preceding the date on which the amount is tendered in final settlement of the account. Interest cannot normally be paid for a period exceeding 365 days from the date of cessation of membership. However, in the circumstances mentioned in proviso (b) of Regulation 16 further 365 days is allowed in exceptional cases as per the satisfaction of the Trustees. It cannot be the choice of the employee to keep deposit of his provident fund for 365 days after retirement. The two circular dated 2.11.88 and 16.4.90 which we have referred to above if they run counter Regulation 16 would have no effect as it has not been shown if Regulation 16 has been modified with the previous approval of the Central Government as required by Regulation 26 of the Provident Fund Regulations. We, therefore confine ourselves to Regulation 189 of the Service Regulations and to Regulation 16 of the Provident Fund Regulations.
Regulation 11 of the Provident Fund Regulations provides for the expenses relating to the administration of the funds including the pay and allowances of the staff appointed for the purpose and the records. It provides for fees and allowances.
To that extent there may be difference in the facts of the case in Shiv Kumar Joshi and the present one. But the facts remain that Supreme Court observed it is immaterial as to who meets the expenses of administering the Fund whether it is employer or the employee, particularly, when Fund has been established for the benefit of the employee. In the present case the employer also gets benefit of deduction in income-tax on the contribution made by it to the Fund and also the expenses incurred for maintaining the Fund. It is, therefore, clear that there is a consideration. In our view State Commission was not correct in holding otherwise. Captain Gupta is a consumer and consumer dispute has been raised.
Once having held that Captain Gupta is a consumer we have to refer to Regulation 190 of the Service Regulations and to the Provident Fund Regulations.
Under Regulation 190 of the Service Regulation, Captain Gupta is to be paid all the accumulated balance to the credit on the day he ceases to be an employee of the Indian Airlines. This would, however, be subject to Regulation 24 of the Provident Fund Regulations which provides for procedure for final payment of provident fund. There is no controversy if procedure prescribed therein was followed or not. It is Regulation 16 which would be relevant which provides for payment of interest on the amount of Provident Fund in the account of member. Captain Gupta would be entitled to interest upto the end of the month preceding the date on which the amount was tendered in final settlement of account. Captain Gupta did not retire till the date of his superannuation which was 3.7.93. The stand of the Indian Airlines that Captain Gupta retired on 2.4.91 is not correct. He was put on annuity @ 95% of his last salary plus Rs.100/- per month. Captain Gupta was therefore entitled to interest as per rate applicable and upto 31.7.93. When we see the calculation of interest as given to Gupta by the Indian airlines, it would be upto 31.5.91.
It was submitted by learned counsel for the Indian Airlines that Indian Airlines was not much concerned with the amount as claimed by Captain Gupta in his complaint, but on the principle to be settled in the case.
We would, therefore, set aside the order of the State Commission and restore that of the District Forum with the modification that Indian Airlines shall pay to Captain Gupta the balance of the interest on the amount of the provident fund to the credit uptil 31.3.93. The amount of Rs.5,000/- awarded by the District Forum as compensation including the cost of proceedings is restored. Captain Gupta is entitled to costs in the present petition which we assess at Rs.2500/-. The balance amount of interest, as per the rate applicable at the relevant time, as ordered above shall be paid to Captain Gupta within four weeks from the date of receipt of this order by the Indian Airlines.
J ( D.P. WADHWA) PRESIDENT J. (J.K. MEHRA) MEMBER (B.K. TAIMNI) MEMBER